General Motors recently released a statement in support of the new scrappage program being pushed by the Obama administration and the democratic contingent in Congress

Based on our understanding of the fleet modernization program announced today, GM supports the plan and urges Congress to move forward as quickly as possible to enact such a program for the U.S. market.

Scrappage programs implemented in other countries around the world have proven to be very successful in re-invigorating car and truck sales. The approach of providing vouchers for new vehicle purchases, which is tied to getting older, less efficient vehicles off the road at the same time is a huge win for consumers, the economy and the environment.

What?!

3/5

SEMA has been fighting hard against this scrappage/clunker program since it was introduced by the tree huggers after Obama's election, under the guise that it would help stimulate the auto industry and save the environment. Studies have show this premise to be false and misleading. Most vehicles traded in on scrappage programs haven't run for years so they weren't contributing any pollution to the environment.

In addition, getting rid of older cars strangles our hobby because the crop of used cars suitable for projects and race cars. Then there's the parts recycling industry and junkyards that help keep other cars on the road by parting out old "clunker" cars.

I understand GM's predicament for needing to sell cars to make money, but considering the condition of the finance industry, even with a voucher for trading in a clunker car, unless you have perfect credit there's no way you'll be able to get affordable financing to buy a new car. So really, this program does nothing except sucker punch the auto enthusiast industry.

Since GM cars make up the majority of enthusiast automotive activities, their support of this scrappage program really feels like they're stabbing us all in the back.

4/5

In a recent statement and press release, SEMA explains what it's trying to do so good cars aren't destroyed:

SEMA SEEKS PROTECTION FOR COLLECTOR CARS AND PARTS

Amendments Offered As Lawmakers Finalize Vehicle Scrappage Program

WASHINGTON, D.C. (May 12, 2009) - The Specialty Equipment Market Association (SEMA) urged Congress to include two additional provisions to controversial legislation that would provide a government voucher to consumers who buy a new car in exchange for scrapping a less fuel-efficient vehicle. The provisions would 1) require that scrapped vehicles be less than 25 years old and 2) permit the engine and drive train to be recycled if they have been disassembled.

The recommendations were proposed in a letter to the Congressional leadership as lawmakers finalize an accelerated vehicle retirement program known as "cash for guzzlers." While SEMA has supported vouchers toward the purchase of fuel-efficient new vehicles as a mechanism to direct new car sales to the automakers and dealerships, the association has steadfastly opposed tying these vouchers to a vehicle scrappage requirement. SEMA offered the amendments as a means to improve the legislation.

Under the draft legislation currently circulating in Congress, the program would last up to one year and potentially scrap one million older cars and trucks. The scrapped vehicle must get less that 18 mpg (15 mpg for heavy pick-ups and vans). The car buyer would receive a $3,500 voucher if they bought a new passenger car that was at least 4 mpg higher than the older vehicle, or a new pickup truck/SUV that was at least 2 mpg higher than the old truck. They would receive a $4,500 if the passenger car was at least 10 mpg higher and the truck/SUV was at least 5 mpg higher. The program would mandate that the engine block and drive train be destroyed.

"SEMA is working with lawmakers to mitigate some of the legislation's unintended consequences and its potential damage to the automotive aftermarket," said Chris Kersting, SEMA's President & CEO. "These commonsense proposals will make sure the government is not spending $3,500 or 4,500 on a vehicle that may only be worth a few hundred dollars but may have potential value to vehicle collectors and to promote the benefits of parts recycling."

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A vehicle that is 25 years old or older is rarely driven, does not contribute to the nation's dependence on foreign oil, and is worth far less than the government voucher. A 25-year exclusion would also guarantee that older cars that have an historic or aesthetic value are not inadvertently crushed. These vehicles are valued by hobbyists or may be a source of recyclable parts for use on restoration projects.

The letter to the Congressional leadership noted that recycling the engine and transmission is environmentally sensitive. "If the legislation simply requires that the equipment be disassembled as the vehicle is scrapped, it would fulfill lawmakers' intent to prevent an engine/drive train from being directly installed into another vehicle," Kersting added. "The responsible recycling of parts is a better solution for preserving natural resources and reducing CO2 emissions than crushing the equipment."

Rebuilt engines require an estimated 80% less energy to produce than a new engine and cost 30-50% less since the core has been salvaged. Critical internal parts are replaced so the final rebuilt product is one that meets or exceeds original equipment performance standards. The engine/transmission can even surpass new car technology with the simple addition of new-technology retrofit equipment.

SEMA's recommendations are intended to reduce the damage a vehicle scrappage program would impose on thousands of independent repair shops, auto restorers and recyclers, customizers and their customers across the country. SEMA will continue to promote alternative incentive programs that will help clean the environment, provide for vehicle and parts recycling, and preserve collector cars for future generations.